Microsoft Could Help Finance a Yahoo Takeover

Despite the turmoil surrounding Yahoo, one tech giant has expressed its interest in maintaining relations with the struggling company. Microsoft has been in “exploratory” talks with private-equity firms who have been considering the purchase of Yahoo’s core business—its news Web sites, search features, and mail services—and wants to provide “significant financing” assistance in the event of a takeover, Re/code's Kara Swisherreports.

Microsoft and Yahoo have a tenuous relationship—then Microsoft C.E.O. Steve Ballmerlaunched a hostile bid in 2008 to buy the company for about $45 billion, and was rebuffed by Yahoo co-founder and then C.E.O. Jerry Yang. The two companies have a longstanding search- and advertising-based partnership, and Microsoft could stand to gain if the core business is sold to a third party. Yahoo’s board is seeking a $10 billion buyout for its core Internet business, though most analysts have said its business is likely worth between $6 billion and $8 billion.

The news about Microsoft broke the same day that activist hedge fund Starboard Value delivered a letter to Yahoo’s shareholders, announcing it would be moving ahead with plans to gut Yahoo’s current board. “The management team and Board of Yahoo have repeatedly failed shareholders,” the firm, which claims to hold 1.7 percent of Yahoo, said in its letter. “Time and again, operating results have been decidedly negative and materially worse than management’s guidance and external expectations.” Starboard—alongside other investors like SpringOwl Asset Management’s Eric Jackson—has been pressuring Yahoo C.E.O. Marissa Mayer and the board for months to make changes to save the company, but now it appears the hedge fund has run out of patience. Starboard says it plans to nominate nine directors to the board, including Starboard C.E.O. Jeffrey Smith, who has been a vocal critic of Mayer’s efforts.

Mayer has said Yahoo is for sale, though the ailing Internet giant seems to be dragging its feet in finding a buyer as Mayer promotes her own turnaround plan. Though Starboard wants her gone, Mayer has plans to stay at Yahoo until the bitter end. She told Charlie Rose earlier this month that she’d “love to be running Yahoo” a year from now.